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Which of the Following Is an Assumption of the Capital

Question 3

Multiple Choice

Which of the following is an assumption of the Capital Asset Pricing Model?


A) Very few investors hold fully diversified portfolios.
B) The relationship between beta and expected returns are seldom linear.
C) Returns on specific shares are affected by general market changes only.
D) Beta values tend to be unstable over the long term.
E) Historical data can be used to predict the future.

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